Accelerated Payment Notices net HMRC 943m GBP

International law firm Pinsent Masons say that HMRC’s Large Business Directorate collected £943m from large businesses over the last year, through Accelerated Payment Notices (APNs).

APNs are issued to those who are suspected of tax avoidance, and demand the full payment of the disputed tax within 90 days.

The notices have been a source of controversy in recent times, as they can be issued without appeal. However, HRMC has withdrawn a number of APNs issued after legal challenges.

According to Pinsent Masons, the given figure of £943m is surprisingly high, and raises concerns as to the prevalence of tax avoidance schemes, particularly through the use of Employee Benefit Trusts (EBTs).

EBTs are set up by companies in order to hold assets and cash. These schemes are legal, but can be used to reduce tax contributions and generate tax reductions.

HMRC have been aware of misused EBTs for some time, but they are now taking it increasingly seriously, to bring an end to tax avoidance schemes.

This includes the Rangers FC tax case, which was heard by the Supreme Court last month. During the course of the seven-year long tax saga, HMRC alleged it lost £46.2m due to such misuse of EBTs.

Heather Self, partner at Pinsent Masons, said: “The amount collected from large businesses via APNs is surprisingly high – and a signal that HMRC is continuing to employ the tool widely.

“The tax will relate to a wide range of schemes and arrangements utilised by large businesses over recent years to reduce corporation tax payments. All large companies should be aware of the conditions under which APNs can be used, and prepare or seek professional advice accordingly.

“The sums involved can be substantial and without the right of appeal, the notices present the potential for significant disruption.

“It is also, of course, sensible to question the validity of any notice received. The use of APNs in a number of circumstances has now been subject to judicial review, with the Court of Appeal due to hear in July the Rowe case challenging the circumstances in which APNs were issued to film scheme users.

“Seeking professional advice at an early stage is essential.”